ISRG · Intuitive Surgical
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $485.49
Note written ·
Price against the kill line
8.6% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $485.49, on record since 11 November 2026. The shares are up 13.6% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $485.49, over the 4 November 2026 post-earnings high close of $482.10, which would show the shares leading the S&P 500. Preliminary fourth-quarter US da Vinci procedure growth above the third quarter's 10% would also prove the call wrong.
Research onlyNot in the portfolio.
Key figures from the filings · Health Care
Quarter to 30 September 2026, filed 21 October 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 3,049
- Revenue, change on a year (%)
- +21.7
- Gross margin (%)
- 68.4
- Operating margin (%)
- 19.4
- Free cash flow, four quarters ($M)
- 3,598
- Net cash, cash less debt ($M)
- 4,043
- Price to earnings (×)
- 52.0
- Enterprise value to sales (×)
- 12.9
All filed numbers
What Intuitive Surgical reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 3,049 | +21.7 | 68.4 | 19.4 |
| first filed | 2,892 | +18.5 | 67.8 | 33.6 |
| first filed | 2,771 | +23.0 | 66.1 | 30.9 |
| first filed | 2,866 | +18.8 | 66.4 | 30.2 |
| first filed | 2,505 | +22.9 | 66.4 | 30.3 |
| first filed | 2,440 | +21.4 | 66.3 | 30.5 |
| Pre-tax income ($M) | 668 |
| Net income ($M) four quarters: 2,957 | 523 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | −2.8 |
| Operating cash flow ($M) | 4,090 |
| Capital spending ($M) | 492 |
| Free cash flow ($M) | 3,598 |
| Cash and short-term investments ($M) | 4,043 |
| Debt ($M) | None reported |
| Net cash, cash less debt ($M) no debt reported | 4,043 |
| Deferred revenue ($M) +17.3% on a year | 669 |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 1,721 |
| Inventory ($M) | 2,128 |
| Shareholders' equity ($M) | 15,986 |
| Market value ($M) | 153,768 |
| Enterprise value, market value plus net debt ($M) no debt reported | 149,725 |
| Enterprise value to sales (×) no debt reported | 12.9 |
| Enterprise value to operating income (×) no debt reported | 45.6 |
| Price to earnings (×) | 52.0 |
| Price to book value (×) | 9.6 |
| Free-cash-flow yield (%) | 2.3 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 2.1% of shares outstanding sold short, 4.0 days of average trading to cover, −1.2% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $20.3M |
| 12 monthsfrom | $0 | $65.0M |
The thesis
Intuitive Surgical's shares look more likely to lag the S&P 500 than lead it over the next three months. US da Vinci procedure growth slowed to 10% in the third quarter of 2026, and management plans a cut of about 3%–5% in instrument revenue per procedure from 2027. The preliminary fourth-quarter procedure count, expected in mid-January 2027, will show whether US growth steadies.
The rating is Low because neither problem has been tested by new operating data. The company has published no new results since its 20 October 2026 report and the 10-Q filed on 21 October 2026. Since then the news has been analyst targets, a board appointment and routine insider sales.
The price reflects a recovery that is already well under way. The shares closed at $449.53 on 11 November 2026, up 12.0% over three months and above both the 50-day and 200-day moving averages. GuruFocus put the forward price-to-earnings ratio at 36.3 on 6 November 2026. That multiple assumes mid-teens procedure growth carries through the 2027 pricing cut, which is the point the January figures will test.
Bullish and bearish views on Intuitive Surgical, Inc.
The bull case on Intuitive Surgical, Inc. (ISRG), in brief: revenue growth accelerated to 22%. The bear case: US procedure growth slowed for a second quarter.
Bull case
- Revenue growth accelerated to 22%. Third-quarter revenue rose 22% to $3.05 billion from $2.51 billion (company 8-K, 20 October 2026). Non-GAAP earnings per share (EPS) was $3.00, against $2.40 a year earlier.
- System placements reached a new pace. The company placed 546 da Vinci systems in the third quarter, up from 427 a year earlier, including 315 da Vinci 5 units against 240 (company 8-K, 20 October 2026). The installed base reached 12,094 systems on 30 September 2026.
- Growth outside the US stays strong. Procedure growth outside the US was 20% in the third quarter (Reuters, 20 October 2026). Apollo Hospitals in Bengaluru, India, introduced the da Vinci 5 system (fiscal.ai, 29 October 2026).
- Gross margin guidance went up. Full-year 2026 non-GAAP gross margin guidance rose to 68.7%–69.3% (company 8-K, 20 October 2026).
- Bullish analysts lifted or held targets. BofA Securities raised its target to $500 from $470 and BMO Capital kept a $518 target, both on 10 November 2026 (fiscal.ai). Rothschild & Co Redburn raised its target to $560 on 23 October 2026 and Barclays to $500 on 22 October 2026 (fiscal.ai).
- Buybacks are large. Intuitive repurchased 7.8 million shares for $2.94 billion in the third quarter (company 8-K, 20 October 2026).
Bear case
- US procedure growth slowed for a second quarter. US da Vinci procedures grew 10% in the third quarter, down from 12% in the second (Reuters, 20 October 2026). Management said it is watching lower Affordable Care Act enrollment and changes to Medicaid eligibility.
- Instrument revenue per procedure will fall. Chief financial officer Jamie Samath said da Vinci instruments and accessories revenue per procedure should fall about 3%–5% at constant mix as Extended Use Program 2.0 rolls out from the first half of 2027 (Q3 call, 20 October 2026). RBC Capital Markets said on 22 October 2026 that these pricing actions put 2027 procedure momentum at risk.
- The margin target sits below today's margin. Samath put the long-term operating margin range at 35%–40%, against a current 41%–42% (Q3 call, 20 October 2026). GAAP EPS fell to $1.49 from $1.95 after a $450 million antitrust settlement charge (company 8-K, 20 October 2026).
- Cautious analysts hold low targets. Evercore ISI cut its target to $375 from $385 on 28 October 2026, and HSBC moved its target to $392 from $391 on 4 November 2026 (fiscal.ai). Both sit below the 11 November 2026 close of $449.53.
- Insiders keep selling into the rally. Director Gary Guthart sold 10,000 shares at $457.34 on 4 November 2026, director Craig Barratt sold 1,150 shares at $460.00 the same day, and chief legal officer Gary Loeb sold 400 shares at $458.15 on 10 November 2026 (SEC Form 4 filings). All sales were under pre-arranged Rule 10b5-1 plans; controller Fredrik Widman also exercised options and sold 5,448 shares at $436.06 on 30 October 2026.
Price setup
The shares closed at $449.53 on 11 November 2026, 25.6% below the 52-week intraday high of $603.88 set on 7 January 2026. The 52-week closing low was $332.02 on 23 July 2026. The 3-month change is 12.0%, measured from a $401.27 close on 13 August 2026.
The last close sits above the 50-day moving average of $414.76 and the 200-day moving average of $430.11 (adjusted daily closes, as of 11 November 2026). The 200-day average is the nearer level beneath the price. A close back under it would put the shares below their longer-term trend again.
The post-earnings high close is $482.10 on 4 November 2026, after a 9.4% one-day rise (GuruFocus, 4 November 2026). The shares then fell on four of the next five sessions to $449.53. A close above that high would show buyers taking the shares past their post-earnings peak despite the open questions on US growth and pricing.
No earnings date is scheduled before January 2027, so no company report is likely to reprice the shares in the next 30 days. GuruFocus put the trailing price-to-earnings ratio at 54.8 on 6 November 2026.
Catalysts ahead
- ~12 January 2027 (est.): Preliminary fourth-quarter 2026 procedure and system placement figures. It is the first reading of US da Vinci growth after the 10% third quarter, and shows whether the slowdown came from a hard comparison or weaker demand.
- ~22 January 2027 (est.): Fourth-quarter 2026 report with 2027 guidance. It sets 2027 procedure, gross margin and operating expense guidance, and shows how much the instrument pricing changes cost in margin.
- ~31 March 2027 (est.): Possible start of the US Extended Use Program 2.0 rollout in the first half of 2027, pending regulatory clearance. It starts the planned 3%–5% cut in da Vinci instruments and accessories revenue per procedure in the company's largest market.
What would change the view
A daily close above $485.49, over the 4 November 2026 post-earnings high close of $482.10, which would show the shares leading the S&P 500. Preliminary fourth-quarter US da Vinci procedure growth above the third quarter's 10% would also prove the call wrong.
What it trades with
The shares trade with large-cap medical device stocks and with US hospital spending and insurance-coverage policy, because US procedures drive most recurring instrument revenue. The 9.4% rise on 4 November 2026 came with no confirmed company catalyst (24/7 Wall St.), so sector flows can move the shares sharply between reports. Competition from Johnson & Johnson's Ottava robot is a slower, company-specific factor. It would show up first in US system placements, which were 335 in the third quarter (company 8-K, 20 October 2026).
The evidence, claim by claim (8)
- Third-quarter 2026 revenue was $3.05 billion, up 22% from $2.51 billion; non-GAAP diluted EPS was $3.00 against $2.40, and GAAP EPS was $1.49 against $1.95. Q3 2026 earnings release (Form 8-K exhibit 99.1) · as of
- US da Vinci procedure growth was 10% in Q3 2026, down from 12% in Q2; da Vinci growth outside the US was 20%. Reuters, 20 October 2026 · as of
- The company placed 546 da Vinci systems in Q3 2026, including 315 da Vinci 5 units, against 427 and 240 a year earlier; the installed base reached 12,094. Q3 2026 earnings release (Form 8-K exhibit 99.1) · as of
- 2026 guidance was narrowed to 14%–15% worldwide da Vinci procedure growth; non-GAAP gross margin guidance was raised to 68.7%–69.3%. Q3 2026 earnings release (Form 8-K exhibit 99.1) · as of
- The CFO said da Vinci instruments and accessories revenue per procedure should fall about 3%–5% at constant mix as Extended Use Program 2.0 rolls out from the first half of 2027. Q3 2026 earnings call · as of
- BofA Securities raised its price target to $500 from $470 and BMO Capital kept a $518 target; HSBC's target is $392 and Evercore ISI's is $375. fiscal.ai, 28 October 2026, 4 November 2026 and 10 November 2026 · as of
- Director Gary Guthart sold 10,000 shares at $457.34 on 4 November 2026 and chief legal officer Gary Loeb sold 400 shares at $458.15 on 10 November 2026, both under Rule 10b5-1 plans. SEC Form 4 filings, 5 November 2026 and 12 November 2026 · as of
- Intuitive appointed Humana executive Aaron Martin to its board of directors, effective 1 January 2027. Company announcement via fiscal.ai · as of
Sources
- SEC EDGAR
- Intuitive Surgical Inc (ISRG) Stock Down 3.4% -- Now Undervalued? GF Score: 96/100 · gurufocus.com ·
- Intuitive Surgical Inc (ISRG) Stock Up 9.4% and Still Undervalued -- GF Score: 93/100 · gurufocus.com ·
- Intuitive Surgical Surges 5.4%, Adding ~$9 Billion in One Session · 247wallst.com
- Intuitive Announces Preliminary Fourth Quarter and Full Year 2025 Results · nasdaq.com ·
- Intuitive Announces Fourth Quarter Earnings · nasdaq.com ·
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